There’s a trust deficit in Africa’s mining industry, but this company has a blockchain solution for it

February 2, 2023
4 min read
Miners in Senegal. Image by Hugh Brown

From the coltan mines of Congo to the gold mines of South Africa, Africa is rich in resources. However, somewhat ironically, most of the continent remains impoverished.

Africa remains poor amidst riches because of greed, illiteracy, corruption, and lack of trust, among others.

Videos like Blood Cobalt: The Congo's Dangerous and Deadly Green Energy Mines | Foreign Correspondent and The life of the super-rich in Central Africa | DW Documentary provide a glimpse of the sordid realities of Africa’s mining sector.

Africa’s mining sector has many problems, but a company called Minexx wants to address mistrust between African miners and the corporations that pay them for their hard work.


Trust and the many challenges facing artisanal miners

Digging for Coalin in Ghana. Image by Hugh Brown

What is known today as artisanal mining (ASM) used to be illegal mining. It is labour-intensive small-scale mining that differs from that of large corporations with sophisticated machines and huge workforces.

With ASM becoming a source of livelihood for 10 million people across the continent, it has been accepted by the concerned governments as a subsistent form of mining responsible for most of Africa's mining activities.

For context, 80% of the world's sapphire and 20% of its gold are gotten through ASM.

Africans who extract these minerals can forge a living for themselves by profiting directly from mining.

Though ASM employs millions of Africans, there are some arguments about how it is a potential revenue source for governments and its impacts on the environment, given the crude methods miners employ.

Although it is no longer referred to as illegal mining, governments still lose a considerable amount of money to ASM yearly. In 2021, Janet Adeyemi, National President, Women in Mining Nigeria, said, "Nigeria lost $3 billion to illegal mining perpetuated by artisans who do not benefit much from the sector due to illiteracy and poverty."

These small-scale miners lack market knowledge and end up selling the minerals they extract for less than the going price in the market.  

This is the problem Marcus Scaramanga, Minexx CEO, wants to solve with blockchain technology.

“The challenge you have with the small-scale mining sector (ASM) is that there’s little trust in the supply chain. This makes it hard to access markets, capital, and the right expertise. No one knows where the minerals come from, no one trusts the environmental social governance (ESG) around the mines.”

Minexx is a mineral traceability platform that also offers expertise, marketplace solutions, and even financing to miners in Africa.

According to Scaramanga, Minexx has been around since 2019. The four-year-old company currently operates in four African countries.

Why Africa? 

A mine in Ghana. Minexx
A mine in Ghana. Source: Supplied

If electronics and their origins fascinate you, then you must be interested in mines because that is where the process starts. According to Scaramanga, tracking the creation of electronic products will take you from the users to large Chinese factories and back to mines.

The problem in the mines presented a business opportunity that could help miners improve their earnings and operations.

To be clear, Minexx’s solution can work across large-scale and small-scale mining operations, but the company is exclusively focusing on ASMs because they are responsible for a higher percentage of global mineral production.

How does Minexx work?

image 12

Transactions involving small-scale mines require a lot of trust.

Per Scaramanga, a miner wants to sell to someone they're sure will purchase the minerals at market price and make the agreed-upon payment.

Interestingly, the miner is not the only person looking for a trustworthy person to deal with. He also needs to ensure that he is buying legally mined minerals extracted under acceptable ESG conditions.

Minexx creates a marketplace where it vouches for miners and buyers.

The miner signs up on the Minexx app and provides adequate information about his mine and the minerals that have been extracted. Minexx's expert on the ground then conducts a mine assessment to verify the miner's information and ensure they’re getting the correct value for their minerals.

Minexx’s solution goes beyond miners finding the right buyers for their minerals. Scaramanga explained that the platform also provides miners with financing and experts who help develop their mines.

Minexx makes money by taking less than ten per cent of the cost of the mine products.

Twenty mine sites across Rwanda, Ghana, Nigeria, and Burkina Faso use Minexx, with each site having at least 1,500 miners.

Transactions and site inspection information are stored on the blockchain, where they cannot be altered to enable transparency between miners and Minexx.

Although the blockchain ensures transparency, it is a concept that miners need to understand, so they know the value Minexx offers. Scaramanga admits the importance of this and said Minexx sensitises miners offline on how the blockchain works.

The issues that plague Africa's mining industry go beyond the mines and are expressed in deep-seated corruption and exploitative policies. Minexx doesn't address these issues, but miners can at least get a fair value for their work. 

Featured image by Hugh Brown 

He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.

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